The Reserve Bank of India (RBI) has imposed a penalty of ₹10 lakh on Muthoot Finance Ltd, Ernakulam, and ₹5 lakh on Manappuram Finance Ltd, Thrissur, for non-compliance with its directions.
In the case of Muthoot Finance, RBI said the penalty is for non-compliance with directions on maintenance of Loan to Value (LTV) ratio in gold loans and on obtaining copy of PAN (Permanent Account Number) card of the borrower while granting loans in excess of ₹5 lakh.
The central bank, in a statement, said statutory inspection of Muthoot Finance with reference to its financial position as on March 31, 2018 and March 31, 2019, revealed, inter alia , the non-compliance.
RBI said it issued a notice to the company to show cause as to why penalty should not be imposed for failure to comply with RBI directions.
“After considering the company’s reply to the notice, oral submissions made during the personal hearings and examination of additional submissions made by it, RBI concluded that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty,” the statement said.
Also read: All you wanted to know about loan-to-value ratio
Manappuram Finance
The central bank said the statutory inspection of Manappuram Finance with reference to its financial position as on March 31, 2019, revealed, inter alia , non-compliance with the RBI directions on verification of ownership of gold jewellery. The RBI had issued a show cause notice, heard the company out and decided to levy the penalty.
Also read: Manappuram Finance posts 10% rise in Q2 net profit
In both the cases, RBI said its action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.
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